Interrelations between consumption and wealth in Poland by i8D420cV


									Applying the FEER approach for the macroeconometric model

                                               Tomasz Zając

                                          Magdalena Zachłod-Jelec†


In this study we discuss the problem of applying the partial Fundamental Equilibrium
Exchange Rate concept for the large scale macroeconometric models. In the literature partial
FEER is derived on the basis of different foreign trade representations. In the small system of
foreign trade such representations seem to work well. Using the macroeconomic model for the
Polish economy (the eMPF model), we tested different foreign trade specifications to
determine FEER in the context of the steady state growth in the long run. We found that some
of the proposed in the literature FEER concepts, that seem attractive in the small systems,
might result in theoretical inconsistency meaning they are not directly applicable for the large

        Key Words: FEER, exchange rate, macroeconometric model, steady state, foreign trade

        JEL Classification: C32, E17, F31

    Ministry of Finance, Warsaw, Poland
    Ministry of Finance, Warsaw, Poland

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